Education Articles

The purpose of Value Line’s Educational Articles is to help individuals better understand the complex world of investments. This section is divided into five categories: Stocks, Funds, Options, Convertibles, and Economy. We are constantly adding educational content so you will want to visit this area regularly to see what Value Line can do to help you with your investment portfolio.

Stocks

It is often said that “cash is king” in business. Thus, a company’s ability to generate cash can be very telling when measuring its health. Accordingly, investors should pay close attention to the “cash flow” line (sometimes referred to as the “Value Line”) on the Value Line page.

Before we can examine a stock’s Relative P/E (price to earnings ratio), we first need to look at its basic P/E. At Value Line, this is calculated by dividing the recent price of the stock by the total of the last six months of earnings and the next six months of estimated earnings. The resulting figure shows the multiple that investors are currently willing to pay for one dollar of earnings. As is the case with most financial ratios, P/E means very little when viewed on its own, which is why Relative P/E is so important.

Options

Delta, Gamma, Theta, Vega & Rho - Although these terms sound complicated, they are easy to understand once you grasp a few basic concepts. Mastering them tells you why options behave the way they do under different scenarios.

Economy

Earnings season is the four times a year, celebrated several-week stretch from early January to early February, from early April to early May, from early July to early August, and from early October to early November in which the vast majority of the nation's corporations report their quarter's sales and earnings--hence the name earnings season.